Few would have thought that in metro Detroit's long-suffering housing market -- still down markedly from its 2005 price peak -- that million-dollar homes would enjoy a surge in sales this year unlike any in recent memory.
Real estate experts say the high-end boom in metro Detroit is a promising sign for a broader and sustainable housing recovery, though it's no guarantee, they told the Free Press.
There were 148 recorded sales of $1 million-plus residences in Oakland, Wayne and Macomb counties from Jan. 1 through last week. That's a 66% increase from a year ago and the highest number sold at that price point since the Realcomp multiple listing service organized the million dollar-and-above category in 2003. Year-over-year sales data for the entire market is not out yet, but as of November, increases for home sales across all price points in the three counties was up just 6% compared with the same time frame a year ago.
At the high end of the market, Realtors boosted sales with high-earning businesspeople in finance, autos and health care industries relocating this year from places such as Chicago and New Jersey as the Michigan economy continued to rebound.
Realtors also sensed a brighter economic outlook among members of southeast Michigan's executive class.
"These people feel better about the economy, about their businesses, about Michigan, and they have the wherewithal to purchase these high-end homes," said Ronni Keating, a Realtor with SKBK Sotheby's in Birmingham who handles many top market clients.
She has been advising those clients to sell because "you really can get some good prices now because the demand is so strong."
All but 16 of the sales this year were in Oakland County, including the chart-topping $4.5-million deal in Bloomfield Township and a $3.9-million castle-like mansion with nine bathrooms on a private peninsula that Sergio Marchionne, the Chrysler and Fiat CEO, snapped up in February.
In Wayne County, $2.2 million bought a 1930s colonial on Lake St. Clair and $1.3 million fetched a home in Grosse Pointe Shores with a backyard tennis court and a rare indoor saltwater pool.
What boosted sales
Real estate insiders attribute the 2012 high-end boom to a confluence of factors that proved just as true for lower-priced homes in the suburban market.
• Pent-up demand from buyers who postponed upgrading homes in the economic downturn.
• Low mortgage rates helped buyers who needed and qualified for financing.
• Slimmer inventories of for-sale, move-in-ready homes pushed up prices, persuading sellers to enter the market.
• More discouraged sellers in the $1-million-plus market swallowed some pride and gave up on prices that made better sense a decade ago.
Nearly all 10 top sales in the three counties were below listing price, according to data compiled by Real Estate One in Southfield. One example: a seven-bedroom English manor near a country club in Grosse Pointe Farms that sat on the market for a year and a half. Eventually, it sold for $1.1 million, or $500,000 below listing price.
"Sellers start out wanting the old number. They fight, they fight, they fight," said Chris Knight of Coldwell Banker Weir Manuel in Plymouth. "Eventually, they either take it off the market because they don't have to sell. And if they have to sell, then they give up and they start dropping."
All the bells and whistles
Ryan Blair and his longtime girlfriend, Kasie Head, are on a Michigan mansion hunt.
The couple and their young son are renting a penthouse at the Fifth Royal Oak as they search for a lakefront home in suburban Detroit.
Blair, 35, has started several West Coast businesses and is the CEO of Troy-based ViSalus, a marketing firm for nutrition products and energy drinks. The California native authored the 2011 memoir "Nothing to Lose, Everything to Gain: How I Went from Gang Member to Multimillionaire Entrepreneur."
Head, 31, said they're looking for a home with "all the bells and whistles" amenity-wise, ideally even a basketball court. They are willing to pay as much as $5 million or more, she said.
"We have the luxury of having multiple homes, and we want our home in Detroit to be cozy, where we spend Christmas and the holidays and where it will just feel like home," said Head, an interior designer.
Yet it has been a challenge finding waterfront property that is relatively new construction, she said. Other crucial qualities are privacy and quiet.
Their other residences are a house in Los Angeles' Hollywood Hills neighborhood and an apartment on Manhattan's Upper East Side.
"L.A. and New York have such a fast-paced beat to them, we want this place to be a place of serenity," she said.
The couple loved an Orchard Lake house with its own orchard and helipad that happened to be near the house of rock star Bob Seger. But the property would have needed significant and time-consuming renovation work. They once hoped to be moved in before year's end, although their search will now continue in 2013.
"We've been able to find quite a few homes that appeal to us, we just haven't found the perfect one yet," Head said.
Not all the way back
Several Realtors anticipate the strong interest in their high-end listings will carry over into next year.
"We just listed one for $1.2 million, and three years ago, nobody would even have looked at it," Knight, the Plymouth Realtor, said of a residence in Northville. "I've already had seven showings on it in nine days, and that's around Christmastime."
Katherine Broock Ballard of Max Broock Realtors in Birmingham sold three of Oakland County's top 10 residential listings this year, including a Tudor-style mansion in Bloomfield Township with floor-to-ceiling windows and 7 acres of manicured grounds. "If it's between $1 million and $2 million and it's something good -- it's gone," she said.
Yet despite this flurry of sales, sellers who expect to fetch the bygone prices of a decade ago are risking disappointment. Rising sales coupled with fewer homes on the market lifted prices from their doldrums, but values are still far below peak.
Across the broader metro Detroit home market, prices were 20% below 2000 levels this fall and 37% from the late 2005 price peak, according to Standard & Poor's/Case-Shiller Home Price Index.
Realtor Kevin Conway of Hall & Hunter in Birmingham had the top home sale of the year in Macomb County: a gated estate in Washington Township with a palatial staircase, interior balcony, an outdoor pool and two garages that could fit up to seven cars -- three for regular use, four that are collector's items.
The residence sold for a relative bargain at $1.2 million, considering how the previous owners put more than $3 million into it, Conway said.
Such good deals for buyers were more common in 2010 and 2011, when luxury sellers had less leverage.
But events unfolding at the national level may have added a dash of urgency to this year's market, especially in the million-plus segment. The new year could well bring higher income taxes and capital gains rates for occupants of these homes, and perhaps another economy-wide slowdown if there is no agreement in the fiscal cliff negotiations.
"The sellers and the buyers both had the same train of thought," Conway said of the $1.2-million estate. "They thought it was better to get something done in 2012 than in 2013."
Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter: @JCReindl.
Source: http://www.freep.com/article/20121230/BUSINESS04/312300212?odyssey=mod%7Cdnmiss%7Cumbrella%7C1
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